Liquor to get costlier in Delhi ahead of festive season? Here’s why

Liquor prices in New Delhi are expected to see a rise in the coming months as the Delhi government is planning to raise excise duty and retail margin to boost revenue under the new excise policy.

The policy is ready and is likely to be notified in October, the Indian Express reported. The news outlet also quoted a senior Delhi government official as saying, “the final draft of the new excise policy is ready.”

The official added that a new officer is yet to be appointed, following which the final draft proposal will be sent to the Delhi Cabinet and Lieutenant Governor for final nod. This comes after Delhi Excise Commissioner Ravi Jha was transferred to Arunachal Pradesh last week.

“Once a new officer is appointed, the final draft proposal will be sent to the Delhi Cabinet and Lieutenant Governor Taranjit Singh Sandhu for final nod. Once the approval comes, the government plans to notify it in October ahead of the peak festival season,” the official added, according to the report.

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The entry of private players into Delhi’s liquor business is unlikely.

“Raising the fixed retail margin and excise duty are among the key objectives. This will be a major change as currently there are only government-run liquor shops in the city. The retailers do not get much revenue due to fixed margins. With this key change, the shops are expected to be upgraded and draw more customers,” the official said.

Premium liquor stores to rise in Delhi

Delhi is also expected to see an increase in the number of premium liquor stores. This is because, according to the official, the current fixed retail margins make it difficult for liquor shops in the capital to stock premium imported liquor priced above ₹1,000.

As a result, consumers often turn to neighbouring cities such as Gurugram and Faridabad, where shops operate without a fixed margin. The removal of fixed margins could therefore make it more viable for Delhi retailers to stock premium imported liquor.

“For instance, let’s say the price of Black Label in Delhi is ₹3,500 but you will get the same brand for a lesser price like ₹2,400 in Gurgaon. This can be addressed once the fixed margins are removed,” the official explained, according to the report.

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Last year, Delhi chief minister Rekha Gupta announced her plans to introduce a new excise policy for Delhi. She also constituted a ministerial committee headed by Minister Parvesh Sahib Singh to formulate a “transparent and socially secure” policy.

Reacting to the proposed changes, Vinod Giri, Director General of Brewers Association of India, which represents the country’s largest beer makers, said, “Retail margins are currently fixed on a per-bottle basis, regardless of the price of the bottle. For Scotch whiskies, for instance, it is around ₹100 per bottle and then comes down to ₹50 and so on. The question is what margin they will allow under the new policy. Margins of 5%, 10% or 15% are generally the norm. There should not be an objection if the margin is up to 10%; anything substantially higher could raise questions,” according to the Indian Express.

On excise duty and liquor prices, Giri said, “If the government is looking at excise duty as a means of increasing revenue, there may be some headroom to raise it. Beer, for example, currently attracts 150% excise duty, while imported liquor attracts 85%. There is also a 25% VAT. If excise duty is increased, liquor prices will rise.